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February 15, 2024–Shippers heading into contract negotiations with ocean carriers at the upcoming Transpacific Maritime Conference, remain in a relatively strong position despite current adverse impacts on global freight movements.

That’s the view of Peter Sand, chief analyst for Xeneta, considered one of the world’s leading ocean and airfreight rate benchmarking and market analytics platforms in the shipping and logistics industry.

“Shippers still hold the upside regardless of the current freight rate environment that seems to favor carriers,” Sand told Cargomatic in a recent interview. “Fundamentally, time is working in favor of the shippers. So, no one should rush.” 

The freight-rate environment that Sand refers to has been created by the current hostilities in the Red Sea, continued drought-related problems in the Panama Canal, and the looming negotiations between dockworkers and their employers on the U.S. East and Gulf Coasts.

“There are so many things going on that you need to deal with all of them at the same time,” he said. “So, it’s all about compromise, right?” But it’s hard to compromise when the issues look equally long-lasting and interlocked with each other.

Sand does not see an easy or quick solution to the negotiations between the International Longshoremen’s Association and their employer, the United States Maritime Alliance, as their current contract expires at the end of September.

“We will not see a swift solution or new agreement signed,” he said. “I’m not being a doomsayer here,” but a quick end to the labor impasse is not the “highest likelihood” in the situation, Sand stated.

“From a capacity perspective in Panama, we expect a sub-normal level of activity for the entirety of 2024. It seems as if we’re not getting normal times back until, perhaps, a year from now,” he said.

By comparison, Sand believes that of the three sets of issues impacting cargo movements, the Suez Canal now is the “one that does hold the possibility of getting a result before the end of the year.” But even at that, he said, “you should not rule it out that it will take longer.”

With all three issues adversely impacting cargo movements into the U.S. East and Gulf Coast ports, the obvious conclusion now being drawn in industry circles is that the U.S. West Coast ports will see an uptick in business as the year progresses. That, in turn, could have an impact on rates. 

“I think we’re already seeing some of that, at least, the anticipation of those hurdles that cannot be easily removed,” he said. “We have seen, especially rates on Far East to the U.S. West Coast, go up quite dramatically.” 

Meanwhile, as shippers head into contract talks with ocean carriers in the Spring, Sand offers them his best advice.

“Be very much on top of your own requirements for moving cargo in the coming season, right? So, you’d only go into tendering armed with the best intelligence about your own requirements and then not being afraid to wait it out.”

Want to hear more of Peter Sand’s conversation with Cargomatic Senior Editor & Writer Eric Watkins? Listen below.